Introduction
From the look of the word tokenomics, it’s a combination of both the word token and economics. Tokenomics is what determines how valuable a token will b, the functions, distribution and everything that’s going to affect it in the long run. Tokenomics is important for the success of a token and it’s what investors look out for before they invest in the project just like reading the whitepaper of a project.
Talking about the token, it’s a digital asset that is gotten or decided upon when developing crypto and it’s different from a coin. Tokens operate on a pre-existing blockchain network and it’s very easy to build. A token can be developed on the Ethereum and Bitcoin Blockchain network and in simple terms they are projects that aren’t Bitcoin or Ethereum. You can check out the difference between a token and a coin in my previous post.
Read Here: Cryptocurrency: Coin and Token (The Difference You Didn't Know About)
Why is Tokenomics important?
Tokenomics is the basic factor that determines the importance and value of a digital asset and how its success will be in the future. You can simply say it’s the blueprint of any digital asset. For any investor looking to invest in any project, the first thing you need to understand or take note of is tokenomics.
Tokenomics also help create trust in the ecosystem between investors and the project that’s if the project is looking to be a long-term project
Things to consider when looking at Tokenomics
Token Utility which is also the use case of the token that is, what the tokens can be used for and the problems they can solve.
Token Supply, this refers to the total number of tokens that would be supplied throughout its existence
Token Burns/mint: Burning of tokens is usually done to remove them from circulation and it’s important to have a schedule to burn or mint them. When tokens are burned it’s referred to as deflationary and when tokens are minted or when new blocks are added or supply is expanded it’s called inflationary.
Then the Token distribution: which is referred to how the tokens are distributed
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Definitely I agree with you on this and all this should be taken into consideration without omitting any
💯 ✍️
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